Fidelity takes on Hargreaves Lansdown with the launch of Select 50 - its own list of top funds (but Woodford doesn't make the cut)
Fund manager and DIY investing platform Fidelity International has launched Select 50, a concentrated list of its top fund ideas.
The firm says the list made up of ideas from across the fund management world was created in response to demand from its customers for a pared-down selection for every part of the market.
While Fidelity already ran a Select list available on its personal investing platform, this new list is a higher-profile, pared-down selection that pits it directly against the likes of Hargreaves Lansdown's hugely popular Wealth 150.
But there is one well-known manager who hasn't made the cut. UK investing legend Neil Woodford's top-selling income fund isn't on the new Fidelity list.
Two-part process: The final list was compiled by the Fidelity teams led by Tom Stevenson (l) and Tom Ewing
Tom Stevenson, investment director for personal investing at Fidelity International, said the launch was in response to customer demand for an elite list of high-quality funds across the investment spectrum.
He says: 'With the universe of funds growing by the day, we have more choice than ever before. This can be useful, allowing us more options to suit our particular investment needs, but our customers are telling us that this choice can be overwhelming.
'We have, therefore, launched the Select 50, a list of high-conviction funds to help guide our investors when choosing funds to meet their long-term investment goals.'
Fidelity's previous Select list comprised more than 100 funds, but these have been overhauled and whittled down to just 50 top ideas across eight parts of the market: Alternatives, Asia and Emerging Markets, Bonds, Europe, Global, Japan, North America and UK.
Just over half of the funds offer a discount if you invest through Fidelity - ranging between five and 10 basis points (0.05 and 0.1 per cent)
Almost all of the investment houses featured are household names such as Invesco Perpetual, M&G and BlackRock.
And many of the individual selections are flagship funds in their respective sectors. For example, in the emerging markets section, the list includes the likes of the £8.1billion Stewart Investors Asia Pacific Leaders fund, which is in the top quartile of its sector over one, three, five and 10 years.
However, there are some notable omissions. Neil Woodford's Woodford Equity Income fund doesn't make the list, and neither do any offerings from Artemis, Kames Capital, Legal & General, Axa or Neptune.
While there are nine Fidelity funds on the 50-strong list, the firm says it applies the same investment criteria to all funds, to 'ensure customers receive a balanced and fair selection'.
By comparison, Hargreaves Lansdown's Wealth 150 offers discounts as big as 50 basis points (0.5 per cent) for the JPMorgan Emerging Markets fund.
|Asset Class||Fund||Discount (basis points)|
|Alternatives/specialist||Investec Global Gold Fund||10.0*|
|Alternatives/specialist||BlackRock Global Property Securities - Equity Tracker Fund|
|Alternatives/specialist||Henderson UK Absolute Return Fund|
|Asia and Emerging Markets Equity||Old Mutual Asia Pacific Fund||7.50*|
|Asia and Emerging Markets Equity||Fidelity Emerging Markets Fund|
|Asia and Emerging Markets Equity||Henderson Emerging Markets Opportunities Fund|
|Asia and Emerging Markets Equity||Fidelity Funds - Asian Smaller Companies Fund|
|Asia and Emerging Markets Equity||Lazard Emerging Markets Fund|
|Asia and Emerging Markets Equity||Stewart Investors Asia Pacific Leaders Fund|
|Bonds||Royal London UK Government Bond Fund||8|
|Bonds||Standard Life Global Index-Linked Bond Fund||10|
|Bonds||M&G European High Yield Bond Fund||10|
|Bonds||M&G Corporate Bond Fund||5|
|Bonds||JPM Global High Yield Bond Fund||6|
|Bonds||M&G Optimal Income Fund||5|
|Bonds||Fidelity Moneybuilder Income Fund|
|Bonds||Fidelity Strategic Bond Fund|
|Bonds||Jupiter Strategic Bond Fund|
|Bonds||Invesco Perpetual High Yield Bond Fund|
|Europe||Baring German Growth Trust||10|
|Europe||Fidelity European Growth Fund||10|
|Europe||Threadneedle European Select Fund||5|
|Europe||Jupiter European Special Situations Fund||10|
|Europe||Invesco Perpetual European Equity Income Fund|
|Europe||Blackrock Continental European Fund|
|Europe||JOHCM European Select Values Fund|
|Global Equity||Rathbone Global Opportunities Fund||10|
|Global Equity||BNY Mellon Long Term Global Equity Fund||7.5|
|Global Equity||Fidelity Global Dividend Fund|
|Global Equity||Invesco Perpetual Global Equity Income Fund|
|Global Equity||Templeton Growth Fund|
|Japan Equity||Aberdeen Japan Equity Fund||10|
|Japan Equity||Schroder Tokyo Fund||7.50*|
|Japan Equity||Baillie Gifford Japanese Fund|
|North America Equity||JPM US Equity Income Fund||8|
|North America Equity||JPM US Select Fund||8|
|North America Equity||Old Mutual North American Equity Fund||7.50*|
|North America Equity||Schroder US Mid Cap Fund||7.50*|
|North America Equity||Fidelity American Special Situations Fund|
|North America Equity||Blackrock US Opportunities Fund|
|UK Equity||Fidelity Enhanced Income Fund||10|
|UK Equity||Liontrust UK Growth Fund||10|
|UK Equity||Fidelity Special Situations Fund||5|
|UK Equity||Threadneedle UK Mid 250 Fund||5|
|UK Equity||CF Lindsell Train UK Equity Income Fund||5|
|UK Equity||Old Mutual UK Smaller Companies Fund||7.50*|
|UK Equity||Jupiter UK Special Situations Fund|
|UK Equity||Franklin Templeton UK Smaller Companies Fund|
|UK Equity||JOHCM UK Dynamic Fund|
|UK Equity||JOHCM UK Equity Income Fund|
|* Discount available via superclean shareclass from end July 2016|
How did the funds get picked?
The Select 50 funds have undergone an extensive two-part screening process, which Fidelity says sets apart its recommendations from rivals.
Firstly, they are chosen on investment merit by Fidelity's nine analysts in the multi-asset Investment Solutions team.
This is the quantitative side of the process. This team, led by Fidelity Solutions director of research Tom Ewing, continually analyses, reviews and rates funds to find the highest conviction ideas.
The analysts looked at performance over different time periods and in different market conditions, relative performance, consistency of ranking against peers and statistical measures such as efficiency ratios.
The second, qualitative part of the process is on a 'deep dive' level, including site visits and manager meetings.
The analysts aim to identify manager skill and their ability to gather and synthesise publicly available information; how adept they are at anticipating market movements; and how they express conviction in ideas through meaningful active exposures.
All funds analysed by Fidelity Solutions are then assigned a rating. Only funds rated 1 or 2 - 'strong buy' or 'buy' - will be considered for inclusion in the list.
If a fund on the list falls to a 3 rating it is placed under review. Any fund which drops to a 4 or 5 - 'sell' or 'strong sell' - is automatically removed.
There are no absolute triggers to sell - even a manager change - and Fidelity says while it will continuously analyse funds both on and off the list, it expects turnover to be low.
The chosen funds are then passed over to Fidelity's personal investing team, headed by Tom Stevenson. Stage two of the process involves analysing the benefits the fund provider will agree to give Fidelity customers.
This includes the level of discount the fund house is prepared to offer.
Fidelity says pricing is crucial 'both on an absolute and relative basis' and will also take into account transparency.
Other factors are the level of access given to the fund manager; the quality of fund information; and the responsiveness of the fund provider when dealing with inquiries and operational service quality.
Customers will receive a discount on just over half of the 50 funds on the list - the biggest discounts are the 10 basis points (0.1 per cent) offered on 10 of the funds, including M&G Corporate Bond, Jupiter European Special Situations, Rathbone Global Opportunities and Liontrust UK Growth.
Stevenson says: 'We believe the combination of these two processes is what makes our Select 50 unique. We are putting our customers right at the heart of our selection process.
'Fidelity is unique in that it has the Personal Investing platform business and an investment business that houses some of the finest expert fund analysts. We have combined the expertise of the two businesses to build a distinct and rigorous two-part selection process to bring our customers the Select 50.'
Tom Ewing, director of research at Fidelity Solutions, adds: 'For a fund to make it onto the Select 50, it needs to go through the same rigorous selection process that we have developed to review, recommend and buy funds for our own multi-asset portfolios.'
Select 50: How does it compare to Hargreaves Lansdown's Wealth 150?
It's hard to argue with the inclusion of any of the funds in the Select 50, which represents a group of very competent managers from established fund houses.
There is nothing here to frighten the horses and although Fidelity says it doesn't place undue emphasis on past performance, there aren't any managers on the list that could be described as 'rising stars'.
Instead, these are funds that do what they say on the tin and for an armchair investor this is a chance to access the best ideas from Fidelity's well-resourced solutions and personal investing teams.
Obviously the Wealth 150 is three times the size of Select 50, but Fidelity says its customers can feel overwhelmed by the level of choice available in the UK funds market, and if that is the case, this short but sweet list could be very well received by its 270,000 platform users.
However, in most cases, the funds aren't as cheap as they are at Hargreaves Lansdown. Hargreaves offers funds with a discount as high as 50 basis points (0.5 per cent), compared to a maximum discount of 10 basis points (0.1 per cent) secured by Fidelity for its customers.
And some of the same funds are cheaper on HL, with investors in Schroder Tokyo, for example, being offered a saving of 0.25 per cent at HL, compared with 0.075 per cent via Fidelity's list.
Investors doing their own comparison should compare both the discounts and what each platform says the final ongoing charges figure is themselves.
Investing in funds via the Fidelity personal investing platform is slightly cheaper than Hargreaves - if you're investing a reasonable amount.
The platform carries a 0.35 per cent charge on investments up to £250,000, 0.2 per cent above that and 0 per cent above £1million.
This is slightly different if you are investing small amounts as the charging structure is slightly different. Fidelity charges a flat £45 on amounts up to £7,500 before the 0.35 per cent rate kicks in. There are also no fund dealing charges for buying and selling.
As for Hargreaves, investors pay a slightly higher 0.45 per cent fee on their total fund investments up to £250,000, 0.25 per cent to £1million, 0.1 per cent to £2million and nothing above that.
Shares and investment trusts also incur a 0.45 per cent charge on the entire holding, capped at £45. Fund dealing is free while share, investment trust, corporate bond and ETF dealing costs £11.95 per trade.